In T Farkas v Nemzeti Adó- és Vámhivatal Dél-alföldi Regionális Adó Főigazgatósága (Case C-564/15) (26 April 2017) the CJEU found that a purchaser who had mistakenly paid VAT to the seller when he should have accounted for it directly to the tax authorities under the reverse charge regime was not entitled to a deduction.
Mr Farkas had purchased a mobile hangar from a seller with an outstanding tax liability. The seller had issued a VAT inclusive invoice. Mr Farkas had paid the auction selling price including VAT and the seller had made the corresponding payment to the Hungarian tax authority. Mr Farkas’s deduction of input tax had been denied on the basis that under the reverse charge provisions Mr Farkas should have paid the VAT directly to the tax authorities.
The CJEU noted that the right to deduct could only be exercised in respect of...
